fiscal rigidity



The financial fiscalism that has been imposed in recent decades is part of the logic of neoliberal capitalism

The logic of the capitalist State integrates a wide social interaction and many institutional rules, and the decision of these rules depends on the organizational capacity of each society, the conditions of capital accumulation and the logic of uneven development, essence of capitalism.

When analyzing the capitalist State, the observation factors must be systematized in its entirety as a social form subordinated to Capital, that is, the control of the State is historically disposed to the interests of the financiers and controllers of social wealth. This determinism does not prevent, at different times, the social dispute for part of the so-called “public fund” to be placed, as part of the broad war of interests that are characteristic of capitalism.

Thus, the so-called “fiscality” aspects of capitalist states, especially budgetary, tax and public spending, must be analyzed within the perspective exposed in a now classic work of political economy: The fiscal crisis of the State, by the Marxist James O'Connor, in which the State “has to perform two basic and often contradictory functions: accumulation and legitimation”. We can complement James O'Connor's perception, with some central aspects of the understanding of the capitalist State, something that will enable us, in the next moment, to address the issue of public budget control and the limits of Brazilian fiscal rigidity:

(i) The material conditions of reproduction of society, therefore economic reproduction, is the necessary basis for the affirmation of the social structure and individual consciences, that is, the reproduction of social classes and different forms of subordination and social ordering, being the State the main political agent maintaining this social order.

(ii) The State is a form resulting from class conflict, inherent to societies that, when reaching a certain level of development of production relations and defined by a pattern of private appropriation of social wealth, require an agent to defend class interests owner. This understanding is directly opposed to the notion of a neutral State or curator of the common interests of the collectivity, dominant in the liberal and Keynesian versions, which underlie the theories of public finance.

(iii) A third aspect concerns the repressive role of the State, in the form of police power, capable of ensuring the private property rights of capitalists.

(iv) The capitalist State is an organic form of capital, a necessary component for its social reproduction process, fulfilling central political functions, such as ideological legitimation and social control, however irremediably linked to economic functions, which act as part of the process of accumulation and economic reproduction, as well as the supply aspects of social infrastructure, as highlighted by James O'Connor.

(v) The State performs, alongside the functions of controlling and legitimizing class rule, general functions necessary for the reproduction of the social collective, many of which are of a technical nature, such as administrative activities linked to social development in its entirety (social security, educational, etc.).

(vi) Finally, it should be noted that the analysis of the capitalist State in general necessarily has to be complemented by its realization in terms of the national State. The modern nation redefines its interior and exterior from the logic of expanded reproduction of capital, whose national base is a necessity, but increasingly surrounded by the condition of the world market and the conditions of uneven development, something that defines the relationship between States and subordinate societies and dependents and central and controlling states and societies of the capitalist world order.

The modern State has its ability to move linked to the conditions of national capitalist accumulation, which determines the limits of tax revenue, alongside the conditions for attracting funds that finance the expansion of its public debt.

James O'Connor, an American Marxist of enormous originality, pointed out, still in the 1970s, that the fiscal aspects of the bourgeois State are limited and restricted by the defining power of capital and its crises. The fiscal crisis of 1970 was one of the most serious moments of capitalism, object of analysis by that author. At the center of that crisis, economic stagnation, with a fall in the profit rate, and rise in relative prices, establishing a scenario of stagflation, a process that triggered the growing difficulty of financing the State and the end of the golden age of post-War capitalism .

Two bankruptcies at the end of the 1973th century were remarkable. The bankruptcy of the city of New York in 2016, which inaugurated, as David Harvey (2000) points out, the “neoliberal practices of presenting banks with [zero] moral hazard conditions and passing on the account to the people through the restructuring of contracts and [ reduction] of municipal services”, one of the hallmarks of liberal reconstruction and a prerogative for the subsequent financialization of the entire US economy. The second historic bankruptcy was that of the Argentine State in the early XNUMXs. The repercussions of the Argentine bankruptcy continue to this day and, perhaps, only with a radical social and political rupture would a new order be established in that country.

The fiscal logic is subordinated to five factors, and the analysis of only a few factors, neglecting part of them, makes the explanations of the fiscal State limited. Addressing these elements are central to the current debate.

(1) State expenditures are functional to capital accumulation, as treated by both Marxist and Keynesian authors, establishing the impossibility of dissociation between the State and commercial economic relations, comprising a certain conditional functionality of the State.

According to James O'Connor, state spending has two basic functions: “social capital and social expenditure”. The first consists of expenses necessary for “profitable private accumulation”; the second is “projects and services” that are necessary for “maintenance of social harmony”, that is, the general conditions of social order essential to the legitimation and control of the capitalist system. In advance, it becomes logical that the tax system imposed on the financialized Brazilian State makes these functions unfeasible.

(2) fiscal financing is based on tax rules, the basis of which is related to the capacity to generate a growing economic surplus, with a portion of this net income generated going to the State. Thus, the public fund requires part of the social surplus produced, and in peripheral societies, tax regression establishes that a portion of wages and income from work finance the State, deepening the unequal character of these societies.

(3) Another fundamental aspect refers to the dependent character of these societies, whose reproduction requires value transfer flows to central societies and states, which largely explains the stricter fiscal tourniquet in societies such as Brazil, a large tributary to the US imperialist center. The so-called “Fiscal Regime” that is established in peripheral societies is based on rigid conditions in maintaining always positive primary results, the objective of which is to guarantee surpluses of social income that are transferred to the financial controllers of the system.

(4) Fiscal rules are not neutral or, to use economic jargon, technical adjustments, what we have are dimensions of politics and social dispute. Thus, the class struggle presents us with the dimension of the conflicting dispute over a portion of the public fund, the only way to ensure that the public budget is not resolved solely as a means of transferring social wealth to financial controllers.

(5) The maintenance of any system of guaranteed purchases of public debt guarantees the growing financialization of the Brazilian economy. According to the Brazilian system, there are no risks for the controllers of the Brazilian public debt, which imposes a system that permanently transfers value and impoverishes Brazilians. It is worth noting that the operational model that will allow the adoption of the public debt system as an instrument for transferring values ​​from the State to the financial segments, in the Brazilian case, has been established since the mid-1970s as part of the fiscal policies of the Military Dictatorship, being maintained since then.

This operational model, according to Lopreato (2013), “practically eliminated the risk of the financial system and consolidated the interests around the rollover of the public debt” and the maintenance of a system of permanent gains for the financial controllers, especially the Banks. The public debt recycling and recomposition dynamics established from this model makes the debt system a fundamental link for absorbing an ever-significant portion of the fiscal fund. Thus, in 2010 interest payments represented 5,10% of GDP, in 2011 it represented 4,90% of GDP, in 2015 it represented 4,30% of GDP, and in 2022 it represented 5,96% of GDP (check https: //

The financial fiscalism that has been imposed in recent decades is part of the logic of neoliberal capitalism, and the practical effect of this type of neoliberal policy adopted by the State on the periphery of capitalism was the increase in the transfer of wealth through capital flows, by a on the one hand, and on the other hand, structural adjustments necessary to guarantee creditors that debts will be magnanimously paid, even if this entails great damage to the well-being of our population.

What is observed of fiscal rigidity in relation to some societies, such as Brazil, does not refer to technicality or, we would say, ideology of economic technique, something so dear to the bourgeois ideology of which economists are faithful servants. It basically refers to the transfer of value that takes place through the impoverishment of its population and the guarantee of rentier gains for the wealthy 1%.

*Jose Raimundo Trinidad He is a professor at the Institute of Applied Social Sciences at UFPA. Author, among other books, of Critique of the political economy of public debt and the capitalist credit system: a Marxist approach (CRV).


James O'Connor. The fiscal crisis of the State. Transaction Publishers, New Jersey (2002).

David Harvey. The senses of the world: essential texts. Sao Paulo: Boitempo, 2016.

Francis. LC Lopreate. Paths of Fiscal Policy in Brazil. Publisher Unesp: São Paulo, 2013.

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